Society as a Stakeholder
Since, in a capitalist society, the means of production are privately held by business firms, society itself is a stakeholder for the large and small business alike. Small business, as well as large firms, must promote harmonious relationships between business and government and between business and other segments of society. It is the responsibility of all business to have a commitment to raise the standard of living and promote sustainable development. Small business must strive to contribute to their community and be a good corporate citizen. Somewhere along the way, the financial firms on Wall Street forgot this very important lesson of capitalism.
Examples
The near collapse of our economic system really began sometime back with the financial failure of firms like Enron. The Enron Corporation was a huge energy company that went bankrupt in 2001. It employed 22,000 people and had innumerable shareholders. It collapsed due to an accounting scandal, or "cooking the books," perpetuated by its own auditing firm, Arthur Andersen, one of the premier accounting firms in the U.S., which also collapsed. Tens of thousands of employees were left without a job and more shareholders were left with a retirement portfolio full of worthless Enron stock.
Enron was the country's largest bankruptcy until 2008 and Lehman Brothers, a huge Wall Street financial services firm. Lehman went under primarily due to the subprime mortgages it made during the 1990s and the early 21th century. The bankruptcy of Lehman Brothers began a domino effect on Wall Street. In order to prevent massive financial firm failures, the Bush Administration put together a huge financial bailout, called TARP, to save most of the other large Wall Street banks.
Since the fall of 2008, we have had many financial firm failures, and failures in other business sectors. Failures have not been confined to large businesses. Small business has had its share of failures, primarily due to the economic recession that resulted from the collapse of Wall Street and the credit crisis that resulted.
Summary
The only way for capitalism to truly prosper is for every business, large business and small business alike, to subscribe to a doctrine of financial and business ethics. If business tries to take shortcuts to profits, they will fail in the long run as we've seen during the early part of the 21st century. Small business plays a crucial role in the American economy. It can make the difference between success and failure of our economy and financial system.
